115 Ala. 650 | Ala. | 1896
Section 5197 of the Revised Statutes of the United States authorizes national banks to charge and receive on loans, discounts, &c., &c., “interest at the rate allowed by the laws of the State, Territory or District where the bank is located, and no more.” The succeeding section — 5198—provides: “The taking, receiving, reserving, or charging a rate of interest greater than is allowed by the preceding section, when know
The settled construction of the last clause of this statute in respect of its limitation of the time within which suit to recover back usury paid must be instituted, is that the “usurious transaction” occurs only when a greater amount than the principal with legal interest has been paid, or judgment has been taken for such greater amount; and hence that the time of the limitation does not begin to run until the creditor has received in the way of payment of principal and usurious interest a sum in excess of the principal and legal interest, or has taken judgment for such excessive sum. The theory upon which this construction proceeds is that the'creditor primarily has an election to repent him of his usurious exaction, which may be made or evidenced by crediting all payments received, whether intended at the time they are made to be of usury or not, on the principal and legal interest; that so long as he has this locus penitentiae it is to be assumed that he will avail himself of the right it gives him to purge the transaction of illegality, and that of consequence it cannot be affirmed until the contrary election has been made by receiving more than the debt and legal interest, or taking judgment therefor, that he has received usurious interest, and -until then the “usurious transaction” has not been consummated, and has not “occurred” within the meaning and intent of the statute. Thus in Duncan v. First National Bank, Thompson’s National Bank Cases, 360, 362 — an action for usury paid — decided by a federal district court, it is said : ‘ ‘From the origin of the loan, from the retaining of the first discount through all the renewals up to the time of the final payment of the principal, or up to the time of entering judgment, there is a locus penitentiae for the party taking the excessive interest. Any time till then he may consider the excessive interest
The debtor obviously-has nothing to do with the exercise of the creditor's option. He has no locus penitentise, no place nor time nor opportunity to repent of anything or to ratify anything. His payment of usurious interest as such is as clear a manifestation of a confirmation and consummation of the usurious transaction as is possible for him to make, and yet that has no such effect upon it. The institution of an action by him to recover back usurious interest so paid is an equally unequivocal assertion of a consummated usurious transaction, and yet it has no such effect; and his action, as in HcBroom's Case, supra, will go out of court because prematurely instituted, because no cause of action had arisen, unless he shows that such with other payments exceed the principal of the loan and legal interest. Nothing, in short, that he can do or forego can hasten of impede the rounding out of the transaction into a consummated payment of usurious interest so long as he has not paid more than the debt and legal interest, or in the least clog or facilitate the unfettered election of the creditor to purge the payments of usury by crediting them upon the loan and interest. His plea of usury when sued for a balance of the principal and interest thereon is no more than an assertion than the contract is tainted with usury. It is much less an affirmation by him that usurious payments have been made than the payments themselves were, or than a suit to recover them back is. Indeed such plea does not at all assert that usurious payments have been made ; that is not the gist of it at all; but its gravamen is that usury was contracted to he paid, and relief upon it, so far from involving an adjudication that usurious interest has been paid, is, to the contrary, an adjudication that no interest has been paid on the particular debt in suit. The interposition of such a plea in a suit on a past due renewal note for a part of the original loan has no effect upon the rights of the creditor-plaintiff to apply usurious interest previously paid on the loan as evidenced by the original, or intervening renewal, notes to
The statute has two distinct members ; it provides for two distinct classes of cases. We have been considering only its last clause. The exigencies of the case before us render it necessary to advert somewhat to the first clause and to consider the bearing it, or a defense of usui’y under it, has upon a case, growing out of the same loan, under the last clause. The effect and field of operation of each clause has been declared by the. Supreme Court of the United States. That court, speaking by Justice SwayNe, after quoting the section, said : “Two categories are thus defined, and the consequences denounced : 1. Where illegal interest has been knowingly stipulated but not paid ; then only the sum lent without 'interest can be recovered. 2. Where such illegal interest has been paid; then twice the amount so paid can be recovered in a penal action of debt, or suit iii the nature of such action, against the offending bank, brought by the persons paying the same or their legal representatives.”—Barnet v. National Bank, 98 U.S. 555. In the first category, relief may be had from the payment of all interest, stipulated for but not paid, under a plea of usury, which proceeds solely upon the ground that usury has been stipulated for, that the contract is tainted with usury. In the second category relief can only be had in the penal action which the statute itself gives. Usurious interest paid cannot be set off against the principal in an action by the creditor to recover the balance of the loan.—Barnet v. National Bank, supra. Or, as stated in another case: “Usurious interest paid a national bank on renewing a series of notes cannot, in an action by the bank on the last of them, be applied in satisfaction of the principal of the debt.”—Driesbach v. National Bank, 104 U. S. 52; Stevens v. Monongahela Bank, 111 U. S. 197; Carter v. Carusi, 112 U. S. 478. In the first category recovery is had “for the corruption of the contract; ” in the second 4 ‘for the corruption of the payment.” The corruption of the contract depends in no degree upon the corruption of any payment, nor indeed upon the fact that any payment has been made-.
Upon the foregoing considerations, our conclusions are, that plaintiff’s action is not barred by the limitation embraced in section 5198, Bevised Statutes, and that his right to maintain it is not affected by the fact that he pleaded usury against the note for a balance of the original loan in the suit upon it by the bank, and upon such plea had judgment forfeiting the interest on that note. The rulings of the city court are in harmony with these conclusions, and its judgment upon the demurrers to defendant’s pleas must be affirmed.
Affirmed.